The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

	Total				Dirt Bikes				Mountain Bikes				Racing Bikes
Sales	$	925,000			$	269,000			$	402,000			$	254,000
Variable manufacturing and selling expenses		475,000				114,000				207,000				154,000
Contribution margin		450,000				155,000				195,000				100,000
Fixed expenses:
Advertising, traceable		70,100				8,900				40,800				20,400
Depreciation of special equipment		44,500				20,800				7,900				15,800
Salaries of product-line managers		114,700				40,100				38,100				36,500
Allocated common fixed expenses*		185,000				53,800				80,400				50,800
Total fixed expenses		414,300				123,600				167,200				123,500
Net operating income (loss)	$	35,700			$	31,400			$	27,800			$	(23,500)

*Allocated on the basis of sales dollars.

Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

Required:

1a. What is the impact on net operating income by discontinuing racing bikes? (Decreases should be indicated by a minus sign.)

	Current Total				Total if Racing Bikes are Dropped				Difference: Net operating income Increase or (decrease)
Sales	$	925,000			$
Variable manufacturing and selling expenses		475,000
Contribution margin		450,000
Fixed expenses:
Advertising, traceable		70,100
Depreciation of special equipment		44,500
Salaries of product-line managers		114,700
Allocated common fixed expenses*		185,000
Total fixed expenses		414,300
Net operating income (loss)	$	35,700			$